The agency releases its long-awaited proposed framework.

In 1992, the Food and Drug Administration (FDA) first stated that it had authority to regulate laboratory-developed tests. On July 31, FDA took its biggest step toward invoking this asserted authority by unveiling its “Framework for Regulatory Oversight of Laboratory-Developed Tests (LDTs).”

In the framework, FDA explains that while it had traditionally exercised enforcement discretion and not regulated LDTs, due to changes in the role and type of LDTs, the agency now intends to regulate LDTs as devices. The agency plans to do this in stages, phased in over a lengthy period of time.

The FDA released the framework in letters to Congress. Under 2012 legislation, FDA was required to provide Congress notice at least 60 days before the agency issued a draft guidance document or regulation. Complying with this obligation, FDA provided this notification just as Congress went into its lengthy August recess. FDA plans to issue the framework for public comment after the 60-day congressional notification period expires. FDA will then need to evaluate the comments and determine what changes to make. The revised guidance document will then undergo further review by the Administration.

If FDA ultimately does issue a guidance document, it will not be legally binding itself. Guidance documents do not create any legal obligations. However, a final guidance document would establish FDA’s interpretation of the law. Thus, the guidance document is of critical importance to industry, patients, and clinicians: While it is not law, it will set forth how FDA plans to apply the law, which is binding.

LDTs as Devices

For several decades, FDA has taken the position that LDTs are devices, and therefore subject to all other device-related requirements contained in the Federal Food, Drug, and Cosmetic Act (FDC Act). The laboratory industry has challenged FDA’s authority to regulate LDTs, saying that they are not devices within the meaning of the FDC Act and that Congress intended laboratories to be regulated exclusively under a separate law aimed at labs, the Clinical Laboratory Improvement Amendments (CLIA). The Washington Legal Foundation (WLF) had set forth these arguments in a citizen petition filed with FDA in 2006.

FDA rejected WLF’s petition the same day it issued the framework. FDA reasserted that all tests made by labs are devices, and that there is no statutory distinction whatsoever between kits sold by manufacturers for sale to labs versus tests developed by a single lab for its own patients. FDA also shrugged off the CLIA argument, saying passage of that law did not affect the device status of LDTs. In addition, FDA dismissed WLF’s argument that this fundamental revamping of laboratory regulation needed to go through rulemaking, rather than the less rigorous process of issuing guidances.

FDA’s interpretation of the FDC Act may not be the final word on the subject. The agency’s imposition of the full panoply of device requirements on LDTs may well prompt litigation, in which case a court will get to decide. However, in the interim, FDA is poised to move closer to issuing a final guidance document.

The Proposed Framework

Because all LDTs are deemed devices by FDA, all labs that make LDTs are subject to regulation under the FDC Act. FDA, however, does not intend to regulate all LDTs in the same manner. Rather, the agency has proposed a tiered, risk-based structure.

If the guidance is finalized, all labs with LDTs—except for those doing forensic testing or certain LDTs for transplantation—will need to comply with some basic statutory requirements, regardless of risks. These will include registering with FDA (or providing a special notification in lieu of registering), submitting Medical Device Reports (MDRs), and submitting notices to FDA in the event the laboratory initiates corrections or removals. These are nontrivial obligations, but significantly less burdensome than what will follow for many labs. All labs with LDTs will need to establish procedures to comply with the MDR and reporting regulations. They will also need to evaluate the complaints they receive and corrective actions they take to determine whether they need to submit reports to FDA.

Some LDTs will be subject to only these basic requirements. One such group consists of low-risk LDTs. Those will be well-established tests, and thus new markers or new technologies generally will not fall within this category. FDA will also exempt “Traditional LDTs.” FDA identified four criteria that it will consider, including that the LDT is used to test patients only at the facility that made the LDT.

Another group consists of LDTs for “rare diseases.” However, that nomenclature is really a misnomer. The category is based on rarity of testing, not the rarity of the disease. It applies only if fewer than “4,000 patients a year . . . would be subject to testing using this device.” As a practical matter, this exemption is likely to be of little utility, since it may take hundreds or thousands, or even tens of thousands, of tests to identify one patient with a rare disease.

The final low regulation category is “LDTs for Unmet Needs.” FDA lists several factors it will consider, including that there is no FDA-cleared or approved test “for that specific intended use” and the LDT “is both manufactured and used by a healthcare facility laboratory” that is treating the patient. Although FDA does not say so explicitly, it appears that FDA would not accord "Unmet Need" status to an LDT unless it is offered only to patients of the facility where the test is conducted. If all of these elements must be met, this exemption would likely be of limited significance due to the geographic restrictions. Thus, while some LDTs will be exempt, those exemptions, as drafted, may be fairly narrow in scope.

All other LDTs will face the full panoply of FDA regulation. This includes registration or notification, MDRs and recall reporting, premarket review, and compliance with the Quality System Regulation. Implementation of these provisions will be phased in.

The first LDTs that will need to comply with these requirements are the high-risk LDTs. FDA plans to require that companies with the highest risk devices submit marketing applications within 12 months of the finalization of the guidance. These first-in-line LDTs include ones that have the same intended use as a companion diagnostic that has been cleared or approved by FDA, and LDTs that have the same intended use as kits that have been approved by the premarket approval (PMA) process. One of the many details that will need to be ironed out is what exactly “the same intended use” is in this context.

The second batch of LDTs that will undergo FDA review are those high-risk devices that do not fall into the first tranche. It is unclear which of these LDTs will be the first to be the subject of a marketing application. FDA says it will develop a plan to decide the sequence in which this next tranche gets called, and will solicit public feedback in developing this prioritization scheme.

FDA expects that it will take five years to work through the process with the high-risk LDTs. The agency then intends to proceed with moderate risk devices. That phase is expected to last four more years. Thus, the framework contemplates a very long process, lasting nine years from initiation to completion.

Under the framework, labs that create high-risk LDTs will be grandfathered for existing tests if they submit their marketing applications when called for. (Presumably, grandfathering will extend to moderate risk tests as well.) On the other hand, labs that want to offer new LDTs will need “to comply with premarket review requirements before marketing of such LDTs” (emphasis added). This grandfathering may well spur labs to introduce new tests ahead of any call for submissions.

What’s Next

Now that Congress has been notified, it could theoretically seek to block issuance of a final guidance. However, given Congress’ complete inability to legislate, this possibility seems very remote.

The proposal is sure to elicit numerous comments, both favorable and unfavorable. Some companies believe that there should be a level playing field, and that manufacturers that submit applications to FDA for kits are strongly disadvantaged vis-a-vis LDTs. There will undoubtedly be comments that echo FDA’s concerns that LDTs are not properly vetted, and that greater controls are needed to ensure the clinical validity of assays and their analytical quality, and to promote patient safety.

On the other hand, there will certainly be comments expressing concerns over the impact of FDA regulation on innovation and patient care. The framework discusses the risks FDA perceives with LDTs, but glosses over any discussion of benefits. Nor does the framework discuss the costs that will be imposed on labs—which are sure to be substantial—or whether FDA has the resources to cope with this large volume of extra work. Commenters will probably also note that the current FDA regulatory system discourages diagnostic manufacturers from modifying cleared or approved devices, tending to freeze them in place. LDTs are more flexible, allowing labs to more readily expand markers or update technology.

FDA’s issuance of the framework is likely to have a significant effect, as labs, investors, and healthcare facilities digest this proposal and assess what it means for them. However, the issuance of the framework is a step in the process, and not its culmination. The debate over FDA regulation of LDTs, which has been long-simmering, is now going to be held in full public view. The debate is likely to be both fascinating and sharp, raising fundamental questions about the role of FDA and innovation in the healthcare system.

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